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You have just won first prize in the publishers book contest. You are given the following payoff options: Option 1. $7,000,000 today Option 2. $2,000,000
You have just won first prize in the publishers book contest. You are given the following payoff options: Option 1. $7,000,000 today Option 2. $2,000,000 today plus $225,000 per year forever beginning one year from today. At what interest rate are you indifferent between options 1 and 2?
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